By Paul Cherney
There are positive technical conditions in place but I do not think that there can be a dramatic shot higher for stock prices unless crude drops back (preferably to $54.20 a barrel or lower). I am expecting a positive bias for price action.
If there is S&P 500 price weakness, I expect limited downside. Historical studies peg "average worst case closes" in the 1,090.28-1,077 area. Chart support on the daily charts is 1,101.50-1,090.19, then 1,079.98-1,060.72.
Chart support for the Nasdaq is now (former resistance) of 1,927.51-1,914, then 1,916-1,906. The overlap of these support areas creates a focus of support. Next support is 1,904-1,852.59, with a focus 1,897-1,886.960.
Resistance for the Nasdaq is 1,934-1,946.68 (on the daily charts). The index has a broad band of resistance at 1,960-2,055, inside this band is a focus of resistance like a brick wall at 1,972-2,006. There is a layer of resistance (1,960-1,971.04) at the beginning of the broad band of resistance.
The S&P 500 has moved above former intraday resistance at 1,098-1,108, which converts to immediate support at 1,108-1,098.
The S&P 500 has resistance at 1,111-1,119.20, this is overlapped at 1,117-1,127.01, which makes the 1,117-1,119.20 area a focus of resistance. The S&P 500 has additional resistance at 1,132-1,142.05, then 1,147-1,163.23; there is a focus of resistance at 1,147-1,150.57.
I do not think this will come into play over the next few trade days but I am parking it here for reference: There was a gap created in the Nasdaq 60-minute chart when the market jumped higher at the open on Oct. 1, 2004. That gap was 1,908.57-1,897.58. Subsequent price action on Oct. 14 partially filled the gap to the 1,900.77 level, so there is still a price gap at 1,900.77-1,897.58. This might still act like a magnet for prices.
Cherney is chief market analyst for Standard & Poor's